Research Report Series No. 126 LABOUR MIGRATION FROM PAKISTAN TO THE MIDDLE EAST AND ITS IMPACT ON THE DOMESTIC ECONOMY PART I

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1 Research Report Series No. 126 LABOUR MIGRATION FROM PAKISTAN TO THE MIDDLE EAST AND ITS IMPACT ON THE DOMESTIC ECONOMY PART I I jaz Gilani M. Fahirn Khan Munawar Iqbal June 1981 PAKISTAN INSTITUTE OF DEVELOPMENT ECONOMICS POST BOX NO. 1091, ISLAMABAD (Pakistan)

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4 LIST OF TABLES (iii)

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8 ACKNOWLEDGEMENTS

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10 We would also like to thank our colleagues and consultants who gave valuable comments on the preliminary draft which have been helpful in making suitable revisions. We look forward to their future comments and hope that such constructive interaction will continue to improve the quality of our work. Last, but not the least,thanks are due to S.H.H. Naqavi who made useful editorial changes in the report, Ijaz Gilanl M. Fahim Khan Munawar Iqbal (ix)

11 INTRODUCTION (x)

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13 In the next three chapters we discuss the money and goods sent by emigrants to their families in Pakistan and the manner in which they are used by their families. Chapter 5 lays out some of the issues relating to the classification of data and their analysis. In Chapter 6 we present our estimates of the volume of remittances and try to identify the channels used by emigrants to transmit those remit; ances home. In the final chapter of this report, we have analysed hov the money coming in is being utilized by the migration households. (xii)

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16 Table - 5 AN EVALUATION OF DIFFERENT METHODS OF ESTIMATING THE NUMBER OF MIGRANTS Method Data Sources Period Covered Estimate of Migrants Evaluation Flow Method Bureau of Emigration and Overseas Employment ,696 Until October, 1977, the data exclude all migrants who obtained visas directly, i.e. neither through the Government nor through a licensed'recruiting agent. Since migration by direct visas is very substantial (in the Bureau data it is 142,363 between October 1977 and December 1979, or approximately 80,000 per year), the Bureau's estimate is considerably below the actual number. Furthermore, the Bureau data exclude all illegal migrants. - Air Traffic Date Variant 1:703,836 Variant 11:1041,863 Source: Abbas and Tariq Javed, "Estimation of Volume of Emigration from Air Traffic Data", International Migration Project Monograph No. 1, (mimeo) If we add up annual averages of 80,000 migrants for the period beginning in 1973 up to 1978, when direct visa migrants began to be registered by the Bureau, it would mean an addition of 480,000 persons. Adding 20% of this number as illegal migrants would bring the total to approximately 1.2 million. Firstly, the data exclude migrants who left the country by land or sea route. Secondly, it does not differentiate between the passengers who are leaving for the. first time and those who were visiting home on temporary visit. The estimates are based on 1 informed judgement' about the frequency with which migrant workers visit home. The results arc highly- sensitive to this judgement which is arrived et without much scientific basis. Stock Method Pakistan Institute of Public Up to Opinion 1979 Source: The as-vet-unpublished data on the subject, kindly provided by the PIPO, which had collected them in surveys of Pakistani households. 1,250,000 The PIPO nation-wide survey used the Labour Force Survey sample. It estimated the number of migrants on the basis of information provided by migrant households. It is the closest to a census of migrant work force conducted in the home country. It is the only method among the ones available to us which can capture the number of both legal and illegal migrants, because it sought information from the household which was not obliged to make this distinction, as it was simply asked: "How many people from this household are working abroad and where?" World Bank Stock 205,800 The figures provided by EMENA-DED do U P to not mention either the source or the 1975 method by which its estimates were made. We can presume that the information was collected from official documents of the labour-importing countries and discussions with their officials. Alternatively, another source for this estimate could be the official figures provided by Pakistani Government - sources, namely, Bureau of Emigration, which for the same period (up to 1975) quotes a figure of 230,077.. In that case the incomplete character of Bureau data mentioned above is equally applicable to EMENA-DED. '

17 Source; EiiENA-DED Data on migrant population in labour-importing countries El-XENA DED study is conducted by the Vcrld Bank in selected labourimporting countries of the Middle Last. The data were provided to us >y the World Bank. Both the possible sources for EMENA-DED.information greatly underestimate the total number of foreign workers, for reasons of policy or lack of knowledge. Nevertheless, unless the method and source of the EMENA-DED estimate is articulated,it is not possible to meaningfully evaluate it. Ministry of Labour and Manpower Up to 1,120, This is an informed judgement by labour attaches in the Middle Eastern countries. Since the labour attaches are intimately involved with the issue, they are likely to have fairly accurate information." However, there is no scientific basis for these judgements.

18 5 Table 2 PIPO Survey Results on the Number of Migrants Average is taken only for those households who indicated that at least one of their members was working abroad.

19 Since the estimates from the two surveys differ, this requires a test of significance. For this purpose we use the estimate of the standard error of the difference between the two values for each subgroup. Table 3 summarises the position: Table 3 Test of Significance of Difference Between the Results of Two PIPO Surveys.. Estimated Value. Standard Error of the Parameter October January Difference difference u The difference in estimates for all the parameter values lies well within one standard, error of the variable, and is not significantly different from zero 1. As such, we can use the arithmetical average of the two estimates for computation of the total volume of migration. Keeping in view the sampling error, we have constructed 95% confidence intervals on these parameters which can provide upper and lower bounds on the computed volume of migration.

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21 The calculation of the number of migrants is now straightforward and is presented in Table 4. Table 4 Calculation of the Number of Migrants * Average figure from the two household surveys.

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23 10 Table - 15 Provincial Composition of Migrants (Numbers in Millions Rural Area Migrants Urban 7 Area Migrants Total Migrants

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29 Table Employment Pattern '"' '" " " (by Sectors and Rura.l/Urban Areas ) ( Percentages )

30 18 also the children in school (in the age group ) and army personnel, there are still a couple of million males out of labour force. Those males, plus some part of the female population, are most likely refraining from expressing their desire to work, if there is no work in their area or if they believe that there is no job for them anywhere. This pool of idle human resources is likely to get mobilized as soon as opportunities arise. The survey of migrant households conducted for the International Migration Project also supports this situation. About 42 percent of the population in the working age has been reported to be out of labour force (i.e. neither working nor looking for work). Of the male population only, one-third of those in the working age are not reported in the labour force. This low participation is generally among younger age groups but it is still sizeable among older groups as shown in Table 6. Table - 6 Labour Force Participation Among the Male Members of the Migrant Households Age Groups Working Male Members of Migrant Households as percentage of Total Working Age-Group Population Rural Areas Urban Areas Total * 2 20 and above Total

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33 II. OCCUPATIONAL COMPOSITION OF MIGRANT WORKERS

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52 39 Table 2 Estimated Domestic Demand for Major Migrating Occupations (000)

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59 46 CHAPTER 4 THE COST OF TRAINING FOR REPLACEMENT OF MIGRANT WORKERS

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64 1. Engineers 2'. Teachers 3. Clerks 4. Nurses 5..Salesmen 6. Accountants Formal/Informal Training 1. Masons 2. Carpenters 3. Electricians

65 .52 The cost of education/training, therefore, has been studied only for these professions. I. Cost of General/Professional Education The cost of general/professional education e.g. for Doctors, Teachers, Nurses, Accountants, etc. includes both Government Costs and Private Costs. Government Costs This is the cost that government incurs in providing the educational facilities; Commission. The data on government cost are available from the Planning

66 Level of Education Development Recurring Total Amount Primary Secondary College (a) Intermediate (b) Degree Technical (a) Diploma (b) Degree ' University Sources Planning Division, Government of Pakistan.

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70 Table 9 Trade-Wise Unit Cost With Regard to the Training.of Skilled and Semi- Skilled Workers \

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72 One hundred and twelve respondents, of 40% of the total sample, had had technical training. Out of these 112, only 26 respondents had obtained training from a formal Vocational Institute. The reamining 86 respondents obtained their skills from informal sources. This indicates the prominent role played by informal training in producing human capital in the country. Most of the informal training is obtained through the arrangements of informal apprenticeship as shown in Table 10. Table 10 Rate of Informal Training Rural Urban Total

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75 Appendix 1 TRAINING COST CALCULATIONS Table 1 Trade-wise Equipment Cost and Depreciation *Life of equipment is assumed to be 10 years.

76 Table 2 Trade-wise Building Cost

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78 The cost of Education for Teacher = Rs (without earning foregone) Rs (with earning foregone)

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124 money. Of these, 34% use the informal bill of exchange (or hundi ) for this purpose. The major explanation for this difference in behaviour has to do with the existence of a developed foreign exchange market in the tribal areas of NWFP, There are will-developed markets of smuggled foreign goods in these areas, which imply the existence of a demand for foreign exchange by the shopkeepers. Since legal restrictions, which apply to the rest of the country regarding smuggled goods, are fairly relaxed here, it is quite

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127 CHAPTER 7 FOREIGN REMITTANCES; ANALYSIS OF THEIR USE

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152 139 ( Rs. in Thousands)

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158 PART 2 (Pakistani Emigration to The Middle East: A Cost Benefit Analysis) Chapter 1. Chapter 2, Chapter 3. Chapter 4. Chapter 5. Introduction Framework For the Cost-Benefit Analysis Estimates of the Net Cost-Benefit of Emigration to the Middle East. Summary and Conclusions Policy Implications Appendices A: Sample Design B: Details of the Field-Work C: Occupational Classification Used in the Report

159 BIBLIOGRAPHY

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